QUESTION ONE [20]

Illustrate and fully discuss the derivation of the demand curve for a perfectly competitive firm.

QUESTION TWO [25]

2.1 Discuss the relationship that exists amongst the three short-run total cost curves. Motivate your answer with the aid of a diagram. (15)

2.2 Explain in detail, the shape of the individual supply of labor curve. Illustrate your answer with the aid of a diagram. (10)

QUESTION THREE [25]

Compare the long-run equilibrium position of a perfectly competitive firm and a monopolist. Illustrate your answer with the aid of diagrams.

QUESTION FOUR [30]

4.1 List and discuss the two (2) main instruments of fiscal policy. (14)

4.2 List and discuss two (2) reasons for the downward sloping shape of the aggregate demand curve. (16)